India creates new 'motor city'

2012-04-30 11:15

SANAND, India - The first sight of India's new "Motor City" is a collection of giant blue-and-grey structures, windowless boxes in corporate colours, the hallmark of modern manufacturing.

The warehouses and machining plants, walled in on an enormous site of more than 500ha, are owned by Tata Motors which moved to the western state of Gujarat in 2008 to start producing its Nano.

A short distance away, in Sanand, teams of labourers, drilling rigs and trucks are preparing the foundations for a new R7.7-billion Ford facility.


Michael Boneham, head of Ford India, says a key reason for investing in Gujarat was availability of land. Ford did not want to risk the sort of protests that have blighted industrial projects elsewhere in the country and he has nothing but praise for the local government.

Boneham said: "I'd call them businesslike. We've set up a two-weekly and now monthly meeting with key project leaders. There are assignments, timings, and there are commitments that are met, which is what impresses me. The government also has transparency which is important for us, and accessibility."

Reliable power supplies, decent infrastructure and ports (at least by India's standards), and the availability of educated labour were the other factors that tipped the decision on where to locate Ford's second Indian plant, which will open in 2014.

Close to Ford's new plant, French automaker Peugeot has chosen a plot of land for its first factory in India. Peugeot's new plant, a proposed R6.5-billion investment, are on are on hold due to the debt crisis in the eurozone.

Suzuki, India's largest vehicle manufacturer, is pressing ahead with a factory elsewhere in Mehsana, near the Mundra port, while motorcycle group Hero has also picked the state for its fourth factory.

Shinzo Nakanishi, Suzuki chief executive, said: "Power was a big consideration (in choosing Gujarat). Other than Gujarat, states have a problem of power supply. Also the quality of the manpower is good... and it was close to the port, our own port."


Suzuki's operations have traditionally been focused in the northern Haryana state, while the other Indian vehicle producing hub is in southern Tamil Nadu where Ford, Hyundai, Renault-Nissan and Michelin already have factories.

Gujarat will soon have Asia's biggest solar park and a state-sponsored scheme to build a banking and finance hub with more office space than the financial districts of Paris, Tokyo, London and Shanghai is underway.

Economic growth in Gujarat has consistently outpaced India as a whole over the past decade, reaching 10.5% in 2010-2011 compared with 8.4%t for the country, according to official figures. An estimated two-thirds of India's 1.2-billion population continues to scratch out an existence on small family farms.

Creating a thriving manufacturing sector is vital if the country is to raise incomes and offer job opportunities to its increasingly numerous and young workforce whose aspirations are changing, economists and government planners say.

Indian Prime Minister Manmohan Singh said: "We need to create eight to 10 million jobs every year over the next decade to absorb the expected growth in the labour force."